This blog is all about economic and financial events happening in Mongolia.

Thursday, March 3, 2016

Mongolian farmers study rice cultivation to boost domestic production

Mongolian farmers and agricultural experts have made several attempts to cultivate white rice in Mongolia over the last 10 to 15 years. In partnership with the Ministry of Food and Agriculture, they aspire to reduce rice imports and boost domestic production.Mongolia imported 29,500 tons of white rice for 14.8 million USD in 2014, according to the official website of Mongolian Customs. The website also reports that Mongolia imported an average of 27,000 tons of rice annually from 2012 to 2014. Some experts have noted that the national demand for rice reached 68,000 tons in 2014.

The more import volumes increase, the more capital leaves the country. CEO of GIMEX J.Gankhuyag stated, “Mongolia imports approximately 70,000 tons of white rice a year. Nearly 60 million USD is spent on this.”

Experts say that imported rice has quite a few downsides. The General Agency for Specialized Inspection found expired rice and violations of storage procedures during an inspection last year. CEO of Dorniin Altan Tos Company O.Munkhbaatar said that compared to current levels, imported rice in Mongolia contained 30 to 60 times more than acceptable levels of lead four years ago. He stressed that lead is a main risk factor for cancer and it is not broken down by the human body nor does it dissolve in water.

China is Mongolia’s biggest rice importer. The Mongolian Customs website shows that out of 29,596 tons of white rice imported to Mongolia last year, exactly 23,453 tons were imported from China, nearly 80 percent of all imports. China recently limited its white rice export volume due to increasing domestic needs, and now, rice is imported to Mongolia through only one border point.

On the other hand, sources say that rice is smuggled into the country through other borders. A customs officer said that smugglers usually put the rice in black bags. It’s doubtful that this smuggled rice meets health standards. This shows that Mongolia needs to cultivate and produce rice to meet increasing domestic need.

Rather than the government, the private sector has been more involved in studying ways to domestically produce white rice.

A representative from the Ministry of Food and Agriculture was asked about this.

She stated, “The private sector is simply experimenting with rice cultivation on small fields. They haven’t harvested rice in significant quantities yet.”

The ministry believes that there aren’t many suitable places for growing rice in Mongolia, as rice is a difficult crop which requires plenty of water and heat.

“Many years of experience and research are required for cultivating white rice. We have to find rice varieties that suit Mongolia’s climate and weather conditions. It isn’t easy to decide whether to cultivate rice, because it’s necessary to try out many different types of rice. Darkhan Province’s Urgamal soum is studying growing a new type of rice in Mongolia at the Agricultural Training and Research Institute. We are making attempts to domestically produce rice,” said Ts.Bolorchuluun, Head of the Agricultural Policy Implementation Department at the Ministry of Food and Agriculture.

Opportunities and experience with cultivating rice in Mongolia

Mongolian agronomists have been researching rice cultivation and production since the late 1990s.

From 1995 to 1997, Mongolian farmers tried growing rice with Japanese methods in the Kherlen River Basin in Dornod Province. This project remained quiet until 2013, when Dorniin Altan Tos Company, a Mongolian and Chinese joint investment company, planted experimental white rice seed near the Kherlen River Basin. The company brought rice seed from Inner Mongolia and planted it in a greenhouse with Chinese specialists.

Agronomist Ch.Sambuubaatar of the Food and Agriculture Department of Dornod Province was asked if it’s possible to grow rice in Mongolia.

“It’s possible to cultivate rice in Dornod Province, as some areas meet heat and seasonal requirements for growing rice. Dornod Altan Tos Company was able to harvest tons of rice, although the rice hadn’t quite matured,” he said.

Milling is a crucial step after the harvesting of rice. It includes washing, paddy separation, whitening, and the polishing of harvested rice. Dorniin Altan Tos Company hasn’t launched its rice on the market because it doesn’t have a milling or processing factory.

Dorniin Altan Tos CEO O.Munkhbaatar said, “There were some difficulties when cultivating rice near the Kherlen River Basin. The paddy water would ‘vanish’ frequently, as the soil hadn’t been leveled. The fertility of the soil was also inadequate. The state initiated rice cultivation to meet domestic rice demands with an import substitution product and keep capital within the nation, but the government’s support is poor.”

He added that Mongolia has the equipment and seeds required for rice cultivation. Agronomist Ch.Sambuubaatar confirmed that Kherlen and Choibalsan soums in Xornod Province have suitable conditions for growing rice.

Experts have said that rice production requires much work, starting with importation of seeds and technology. They advised that research and experiments be conducted for five to seven years before starting rice production. They explained that one year of experiments isn’t enough.

Farmers in Arkhangai Province are also actively taking part in researching rice cultivation. Ten experts from the Food and Agriculture Department of Arkhangai Province and agronomists from Kharkhorin, Nariinteel, and Arvaikheer soums trained and studied rice production technology in Hokkaido Prefecture, Japan, from 2011 to 2015 under a cooperation program between the Mongolian and Japanese governments.

Last year, rice was cultivated on a total of 296 square meters in the eastern region, and around 46 kg of rice was harvested. Currently, farmers are continuously studying soil and weather conditions. They plan to find rice varieties that can endure severe cold weather conditions.

GIMEX strives to produce rice within five years

The Mongolian company GIMEX won a tender announced by the Ministry of Food and Agriculture in 2013, and started planting rice in a rented field in Laos.

“At the moment, GIMEX is renting a 300 hectare field in Laos. We’ve started supplying white rice to Mongolia,” said J.Gankhuyag, CEO of GIMEX.

The company will conduct their second harvest this October. GIMEX started off renting 25 hectares of land, which later expanded to 50 hectares, and then 300 hectares. J.Gankhuyag said it’s possible to expand further. He added that transportation costs end up quite high because Laotian infrastructure is poor and they don’t have seaports.

The company is growing Jasmine rice, which is known to be the best type of rice in the world. J.Gankhuyag noted that they are currently trying to sell 80 tons of rice in the Mongolian market, and GIMEX has reportedly signed a sales contract specifying a retail sales price of 5,000 MNT per kg .

J.Gankhuyag announced that the company strives to sell their rice domestically in three to five years. It is also gathering seeds from Japan, South Korea, and China’s Heilongjiang and Xinjiang provinces to find the most suitable rice variety for the Mongolian climate. GIMEX receives consultation from Japanese companies to ensure minimum loss, risk, and error.

“Our company has been researching rice cultivation and production for 12 years. Growing white rice in Mongolia will ensure food safety, the quality of rice, make origins clear, and will provide a new domestic product to consumers. Our study shows that it’s possible to meet domestic rice demand by cultivating rice on 30 to 40 hectares of rice paddy. It can’t be denied that Mongolia will be able to even export rice if rice paddies are expanded. People are digging for gold from underground, but we aim to grow ‘gold’ above ground,” said J.Gankhuyag.